Ankur Doshi: Service Tax Changes in the Budget

Service Tax provisions of Budget 2011

Section	Sub Clause	Details	Category
65	9	Definition of Authorised Service Station omitted	Omission
	25a	Definition of Clinical Establishment introduced which cover all types of hospitals with the facility of more than 25 beds and Central Air Conditioning either in whole or part of its premises offering services in any system of medicines with the exception of Government and Local Authority controlled Hospitals.	Newly Introduced
	27	Definition of Commercial training or coaching centre amended to include Pre School coaching & Training centre or any educational institute granting degree, diploma or certificate recognized by law. So whether all the school and colleges are included is a question ????	Scope Expanded
	104 (c)	Definition of Support Service of business or commerce amended to include administration assistance in any manner instead of only marketing.	Scope Expanded
	105 (zo)	Vis-à-vis omission of definition of Authorised Service Station the taxable service definition is also amended to include any person providing service for repair, decoration, etc. of any motor vehicle except 3 wheel scooter auto rickshaw & goods carriage motor vehicle.	Scope Expanded
	105 (zx)	Amends the definition of taxable service of Life Insurance Business to include all type of charges i.e. whole premium instead of only risk premium.	Scope Expanded
	105 (zzze)	Amends the definition of taxable service of club & association to include services provided to non members also. Earlier these services were exempt.	Scope Expanded
	105 (zzzzm)	Amends the definition of taxable service in relation to Legal Consultancy Services to include service provided by a Business entity to any person and representational services provided by any person to business entity i.e. appearing before any authorities or court. So legal consultancy services provided by an individual to an individual or business entity is still out of purview while the representational services have been made taxable.	Scope Expanded
	105 (zzzzo)	Amends the definition of taxable service in relation to Health Check-up and Treatment services to include Clinical Establishment, the definition of which is provided supra and also to include visiting doctors in such establishment.	Scope Expanded
	105 (zzzzv)	Service provided to any person by a restaurant having Air Conditioning in any part and holding license to serve Alcoholic Beverages	Newly Introduced
	105 (zzzzw)	Service provided by any type of hotel for accommodation for continuous period of less than 3 months.	Newly Introduced
70		Penalty for late filing of Return increased from ` 2,000 to ` 20,000	Increase in Penalty
73	1 (A)	Omitted, which provided the concessional penalty of 25% of Service Tax and consequential amendment to sub section (2) is made.	Omission
	4 (A)	New clause is inserted which deals with penal provision with certain provisos.	Newly Introduced
73B		Certain relaxations in interest rate to certain persons	Relaxation
75		Certain relaxations in interest rate to certain persons	Relaxation
76		Penalty for failure to pay service tax has been reduced. ` 100 per day or 1% p.m. subject to maximum 50% of service tax payable which was earlier ` 200 per day or 2% p.m. subject to maximum of service tax payable.	Relaxation
77		Penalty for any other contravention of rules where there is no penalty specified has been increased from ` 5,000 to ` 10,000.	Increase in Penalty
78		Section substituted with new provisions. Penalty has been reduced from maximum 200% to 100% with certain provisos.	Relaxation
89		Besides other provisions under the section there is one harsh provision introduced. If any person collects service tax and does not pay the same within a period of 6 months when it becomes due he shall be sent to imprisonment for a period of 1 year.	Very harsh provisions.

Certain other machiney provisions have also been inserted or amended. The above provisions shall come into effect from the date of assent of Hon'ble President to the Finance Bill.

Certain Notification have already been issued with various effective dates. Some of the notifications are as under :-

Notification No.	Details	Effective Date
1/2011	It provides that in relation to Works Contract Composition Scheme Cenvat Credit of tax paid on taxable service in respect of Commercial or Industrial Construction, Construction of Complexes and Erection, Commissioning or Installation service is allowed upto 40% of tax paid under Regular payment Scheme.	01-03-2011
2/2011	Amendment to Service Tax (Determination of Value) Rules, 2006	01-04-2011
3/2011	Amendment to Service Tax Rules	01-04-2011
4/2011	Increase in Air Fare	01-04-2011
5/2011	Exempts organizer of a Business Exhibition	01-03-2011
6/2011	Exempts certain projects under construction of complexes	01-03-2011
7/2011	Exempts certain General Insurance policies	01-03-2011
8/2011	Exempts certain transport of goods by Air, Rail or Road	01-04-2011
9/2011	Exempts certain value of transport of goods by Air	01-04-2011
10/2011	Exempts works contract services provided within Airport	01-03-2011
11/2011	Exempts works contract services provided within Port	01-03-2011
12/2011	Amendment to Export of Services Rules	01-04-2011
13/2011	Amendment to Taxation of Services (Provided from Outside India and Received in India) Rules	01-04-2011
14 & 15/2011	Rate of Interest increased from 13% to 18%	01-04-2011
16/2011	Grants abatement to transport of Coastal goods, Goods through National Waterway or Inland Water	01-03-2011
17/2011	Certain exemptions to units located in SEZ and refund provisions.	01-03-2011
18/2011	Introduction of Point of Taxation Rules	01-04-2011